Reassessment and suppression penalty fail where genuine exemption claim is backed by documents and untested statements lack proof.

A reassessment under the Tamil Nadu General Sales Tax Act was unsustainable where the assessees supported their second-sale exemption claim for groundnut purchases with bills, registration particulars and transport permits, and the Revenue failed to produce positive, reliable material showing the sellers were fictitious or the documents were bogus. Untested third-party statements could not displace contemporaneous documentary evidence or justify reopening. On the same facts, penalty for suppression was not leviable because the exemption claim had been bona fide and originally accepted, with no wilful non-disclosure shown. The revisions were dismissed and the Tribunal's relief in favour of the assessees was upheld.

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Issues: Whether the revisional assessment under section 16(1) of the Tamil Nadu General Sales Tax Act, 1959, and the penalty under section 16(2) of that Act were sustainable when the assessees claimed exemption under section 10 on purchases of groundnut as second sales supported by bills, registration particulars, and transport permits.

Analysis: The original assessments had accepted the exemption claim after examining invoices, vouchers, accounts, and permits. For reopening, the Revenue had to establish by positive and acceptable material that the exemption was wrongly granted. The Court found that the assessees produced documentary evidence showing the sellers' registration numbers, bills, and cess-free permits for movement of goods from Dindigul to Karur, while the Revenue failed to examine the alleged sellers or produce reliable evidence that they were non-existent or that the bills were bogus. The statements relied on by the Revenue were taken from persons not shown to be the sellers and were not subjected to cross-examination, so they could not be relied upon. On these facts, the reassessment lacked legal basis. Since the exemption claim was bona fide and had originally been accepted, mere rejection of that claim could not amount to wilful suppression warranting penalty.

Conclusion: The revised assessments and the penalty were unsustainable, and the assessee was entitled to succeed.

Final Conclusion: The revisions were dismissed and the relief granted by the Tribunal in favour of the assessees was upheld.

Ratio Decidendi: A reassessment under the sales tax law cannot be sustained on suspicion or untested third-party statements when the assessee has produced contemporaneous documentary evidence supporting a genuine exemption claim, and penalty for suppression is not leviable absent wilful non-disclosure.

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